Smart Ways to Approach Refinance Settlement

Refinance settlement is the point where your new lender pays out your old loan and takes over the mortgage on your home. You don't swap owners or hand over keys. It's paperwork, timing and a few phone calls, and most of it can be handled around your roster.

If you're already part way through a home loan refinance, this article walks you through what happens next and where delays tend to creep in.

What Happens on Refinance Settlement Day?

On settlement day, your new lender pays out your existing lender, the old mortgage is removed from your title and the new one is registered. Refinance settlement is the formal process where your new lender pays out your existing loan and registers the new mortgage against your property title.

Your solicitor or conveyancer coordinates this. Unlike a property purchase, a refinance doesn't involve changing ownership, and your solicitor or conveyancer handles the process on your behalf. That means you don't need to be standing in an office on the day. You'll usually get a confirmation once it's done, so a night shift or court day won't hold anything up.

How Long Does Refinance Settlement Take?

Refinance settlement commonly takes around four to six weeks from formal approval, though some are faster. Some lenders and situations move faster, and others slower.

The longest wait is often your current lender. A discharge typically takes 10 to 15 business days. Your new lender, your valuation and your signed documents all feed into the same timeline, so the quicker you return paperwork, the sooner a settlement date can be booked.

Who Does What During Settlement

Your new lender, your old lender and your conveyancer each have one job, and your job is to sign and return documents promptly. Your new lender prepares a settlement statement and sends a discharge authority to your current lender. Your solicitor or conveyancer prepares the discharge of mortgage documents, and your existing lender provides the final payout figure and releases the mortgage.

Your broker sits in the middle and chases each step. If you work rotating shifts, tell them the best times to reach you and whether they can email documents for signing. That one conversation saves days.

Why Does a Delay Cost You?

Interest continues on your old loan until the payout reaches your existing lender. The payout covers the outstanding balance plus any accrued interest up to the settlement date. The real cost of a delay is the saving you miss out on, which is the gap between your old rate and your new rate over the extra days. A delay can also push you past a new loan's fee or discount deadline.

As an example, take an officer with a $500,000 balance whose new loan would save 0.50 percentage points. That saving is worth about $6.85 a day. Their new loan is approved, but the signed discharge authority sits unreturned for a fortnight because of back-to-back shifts. That's about $96 of lost saving over 14 days. At the illustrative rate of 6.75% p.a., the old loan is accruing roughly $92 a day, or around $1,300 over the fortnight. That is interest they still owe on the old loan, not an additional cost.

The fix is simple. They sign the discharge authority the same day it arrives, and their broker asks the current lender to confirm the payout figure and the target settlement date in writing. Settlement then lands in the first available slot rather than the second.

The figures are illustrative only. Your actual balance, rate and lender will differ.

Fixed Rate Expiry and Break Costs at Settlement

If you leave a fixed rate loan before the term ends, you may owe break costs. Check your loan contract and terms and conditions, and ask your current lender for a written break cost estimate or payout figure before you lodge your refinance application, not afterwards.

If your fixed term is close to finishing, timing matters. Settling after the term ends can avoid break costs, but waiting also means your loan may roll onto the lender's revert rate for a period. Our page on fixed rate expiry explains how to line up the dates. The trade-off is that holding off to dodge fees can mean paying a higher rate for a few weeks, so it's worth comparing both options in dollars.

Fees to Expect When You Switch Lenders

A refinance usually involves a discharge fee from your old lender and legal or registration costs, and these vary by lender and state. For example, Macquarie charges a $400 mortgage discharge fee (plus any third-party costs), which is included in your final payout figure.

That's why a lower rate doesn't automatically mean you're ahead. Ask your broker for a full cost summary alongside the new repayment. A loan health check will show whether the savings from getting a lower interest rate outweigh the switching costs for your loan amount and timeframe.

What to Check After Settlement Completes

After settlement, confirm the old loan account is closed and your new loan details are correct. The discharge can take a few days to register, so confirm with your broker that it has gone through and the old account is fully closed.

Check your first repayment date, your direct debit and any offset account or redraw facility on the new loan. Cancel any leftover payments to the old lender so nothing doubles up, and make sure your pay is directed where you expect it.

Settlement is the last step, but it's where small admin slips cost the most. Take a few minutes to sign documents the day they land, and your switch should run to plan. Call one of our team or book an appointment at a time that works for you, including around your roster.

Frequently Asked Questions